Orders of $1.17 billion, increased 5.4% compared to the third quarter 2023. Third quarter 2024 demand was strong in Heat Transfer Systems (“HTS”) and Repair, Service and Leasing (“RSL”). HTS demand was driven by LNG and other energy-related orders for brazed aluminum and air-cooled heat exchangers. LNG is driving demand through the value chain with multiple Chart applications, including a large order for compressors in upstream gas processes in Qatar, multiple marine orders for EGR blowers, and continued pickup in HLNG vehicle tanks. The demand in RSL was underpinned by new long-term service and framework agreements. RSL book-to-bill in the third quarter 2024 was 1.05.

To date, our cost synergies from the Howden acquisition have exceeded $250 million which was our original year-three (2026) target. Those earlier than anticipated cost synergies were a contributor to our reported gross margin of 34.1%, dropping through to reported operating income of $178.5 million, or 16.8%. When adjusted for one-time items described above, adjusted operating margin was 22.2%, an increase of 450 bps when compared to the third quarter 2023 and 50 bps higher than the second quarter 2024. All four segments had an increase in their third quarter 2024 gross profit margin as well as their operating margin and adjusted operating margin when compared to the third quarter 2023.

EBITDA of $248.4 million was $260.7 million when adjusted for the one-time costs related to restructuring and Howden integration as well as the offsetting gains in the quarter on our minority investments. Adjusted EBITDA of $260.7 million included a foreign exchange negative headwind of $9.3 million in the third quarter 2024; excluding the foreign exchange impact, adjusted EBITDA would have been $270.0 million. Adjusted EBITDA margin of 24.5% grew 290 bps compared to the third quarter 2023.

LNG, hydrogen, data center, and carbon capture (“CCUS”) demand for our equipment and technology is growing.

Our IPSMR? process technology for modular LNG liquefaction and our associated proprietary equipment continues to gain traction, with dozens of technical validations approved for its use in current and potential future projects, including the following:

• ExxonMobil – on behalf of Mozambique Rovuma Venture (MRV), operator of the Area 4 concession in northern Mozambique’s Rovuma Basin – recently announced its strategic decision to select our IPSMR? liquefaction technology and proprietary equipment for the Rovuma LNG project at the Afungi peninsula. The Rovuma LNG Project will produce, liquefy and market natural gas from reservoirs of the Area 4 block of the offshore Rovuma Basin and includes the construction of 12 modules of 1.5 MTA each, with a total LNG capacity of 18 MTPA, as well as associated onshore facilities. The selection of Chart IPSMR? for the 12 liquefaction modules is expected to help enable increased project competitiveness, improved reliability and lower GHG emissions. This project content is not yet in backlog, although early engineering work has been booked.

• The sale of Tellurian to Woodside Energy was completed on October 8, 2024. The Woodside Louisiana LNG (formerly the Driftwood project) will utilize our IPSMR? process technology and associated equipment. The project content is not yet in backlog; we received a small engineering release in October 2024.

• Viability Gap Plc., N Gas Tanzania Ltd., and Tanzania Petroleum Development Corporation have chosen to partner with Chart Industries to utilize our IPSMR? process and associated equipment for their small-scale LNG project in Tanzania, which is anticipated to commence after the finalization of the FEED (Front-End Engineering Design) phase. This project is not yet in backlog.
  

Additionally, in the third quarter 2024 and October 2024, we have executed the following hydrogen-related agreements, which do not yet have any content in our backlog:

• We have partnered with Renergy Group Partners LLC (“Renergy”), a renewable energy and infrastructure solutions provider, on Renergy’s green hydrogen plant in Egypt, which is anticipated to produce 450,000 tons of hydrogen per year. As part of this partnership, Chart will provide Renergy with hydrogen liquefaction, storage, and compression equipment. Final investment decision (FID) is expected in first quarter 2026, and the first phase of the 160,000MT liquid green hydrogen per year project is expected to be operational in 2030.

• We executed a Memorandum of Understanding (“MOU”) with a developer of hydrogen production projects in Europe for a 30 ton per day hydrogen liquefier and associated ISO containers. Total anticipated Chart project content is anticipated to be approximately $85 million. The project is expected to FID in 2025.

• We executed a Collaboration Agreement to work with PETROJET, Egypt’s largest state-owned construction company, to advance hydrogen projects across Egypt.

• We signed a MOU with the Region Bretagne, BrestPort, Bretagne Development Innovation and EO Concept as part of their European projects to convert their fleet of ships to use LH2 and to develop a port energy hub for the supply of renewable fuels. Chart will bring its expertise for the development of a 10 ton per day (“TPD”) hydrogen liquefaction and refueling at the Port of Brest.

We are seeing increasing scope and size for our CCUS offering, including providing our liquid oxygen bulk storage tanks to the “Catch4Climate” (CI4C) project, an oxyfuel technology carbon capture project led by four European cement manufacturers.

In October 2024, we received another data center air-cooler order and we were awarded a hydrogen liquefaction project with our partner, indigenous owned Salish Elements out of Vancouver, British Columbia (“BC”) for the first phase of their BC Hydrogen Highway project.

Third quarter 2024 segment results (as compared to the third quarter 2023, pro forma continuing operations unless noted otherwise).

Cryo Tank Solutions (“CTS”): Third quarter 2024 CTS orders of $126.2 million decreased 17.5% when compared to the third quarter 2023, primarily driven by the third quarter 2023 having had one order for $19.2 million for railcars. In the third quarter 2024, we saw slowing demand in China, which is primarily reflected in CTS. Third quarter 2024 sales of $162.5 million increased 4.6% when compared to the third quarter 2023. Reported gross profit margin of 25.0% increased 280 bps compared to the third quarter 2023.

Heat Transfer Systems: Third quarter 2024 HTS orders of $424.7 million increased 151.0% when compared to the third quarter 2023 driven by multiple LNG and traditional energy equipment awards. Third quarter 2024 HTS sales of $256.2 million were a record and grew 12.5% compared to the third quarter 2023 and had associated reported gross profit margin of 29.8%, a 340 bps increase compared to the third quarter 2023, driven by project mix.

Specialty Products: Third quarter 2024 Specialty Products orders of $237.8 million decreased 48.9% when compared to the third quarter 2023 as the third quarter of 2023 included larger hydrogen liquefaction orders whereas third quarter 2024 did not. We received one hydrogen liquefaction award in October, and we anticipate at least one additional hydrogen liquefaction project award in the fourth quarter 2024. Additionally, we anticipate one large mining project award in the fourth quarter 2024. Third quarter 2024 Specialty Products sales of $283.3 million were record for the segment and increased 25.9% when compared to the third quarter 2023 driven primarily by increasing throughput and hydrogen projects progressing. Reported gross profit margin of 26.3% increased 60 basis points when compared to the third quarter 2023 yet decreased sequentially from 29.1% when compared to the second quarter 2024. The sequential decrease was due to third quarter 2024 specific expenses incurred at our newly opened Theodore facility (“Teddy2”) related to a supplier’s machinery startup challenges and associated inefficiencies on specific space-related projects.

Repair, Service and Leasing: Third quarter 2024 RSL orders of $377.9 million increased 16.5% when compared to the third quarter 2023. Third quarter 2024 sales of $360.5 million increased 36.1%. RSL orders and sales growth were driven by service, repair, and spares in addition to a large aftermarket sale of equipment. Reported RSL gross profit margin of 47.4% was driven by the execution of continued synergies as well as positive mix.

FCF of $174.6 million in the third quarter resulted in net leverage ratio of 3.04; reiterate our net leverage ratio target of 2.0 to 2.5

Third quarter 2024 reported net cash from operating activities of $200.7 million less capital expenditures of $26.1 million resulted in $174.6 million of FCF. Our September 30, 2024 net leverage ratio was 3.04.

We anticipate our 2017 seven-year convertible notes to settle at maturity in November 2024 by paying the principal in cash (approximately $258.7 million) and delivery of shares for the anticipated settlement of the premium.  This is already included in our share count in our guidance.

Additional cash-generating and debt paydown activities are currently underway and are anticipated to be completed in the coming few months. These include but are not limited to property sales, the potential of a small product line divestiture and the repatriation of foreign cash.

2024 Outlook.

Our current full year 2024 sales outlook is approximately $4.20 billion to $4.30 billion, an increase of 18.0% to 20.5% when compared with full year 2023, proforma. We anticipate full year 2024 adjusted EBITDA of approximately $1.015 billion to $1.045 billion, approximately 24.2% to 24.3% EBITDA margin. Our anticipated full year 2024 adjusted diluted EPS is expected to be approximately $9.00 based on a tax rate of approximately 22% and a diluted share count of approximately 46.5 million shares for the full year 2024. FCF is anticipated to be approximately $400 million. The changes to our 2024 outlook are primarily due to timing of larger orders and their associated revenue recognition (timing and mix), foreign exchange impact, tax rate change, and share count change.

2025 Outlook.

Our 2025 sales are anticipated to be in the range of $4.65 billion to $4.85 billion with associated adjusted EBITDA between $1.175 billion and $1.225 billion. Our anticipated full year 2024 adjusted diluted EPS is $12.00 to $13.00 inclusive of a tax rate of approximately 22%. Additionally, we anticipate ending 2025 with approximately $3 billion of net debt, based on full year 2025 free cash flow generation of approximately $550 to $600 million. We look forward to sharing additional bridges and details on our 2025 outlook at our Capital Markets Day on November 12, 2024 from 9am to 11am eastern time.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s business plans, including statements regarding completed acquisitions, divestitures, and investments, cost and commercial synergies and efficiency savings, objectives, future orders, revenues, margins, segment sales mix, earnings or performance, liquidity and cash flow, repayment or settlement of maturing debt, inventory levels, capital expenditures, supply chain challenges, inflationary pressures including material cost and pricing increases, business trends, clean energy market opportunities including addressable markets, and governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "expects," "anticipates," "believes," "projects," "forecasts," “outlook,” “guidance,” "continue," “target,” or the negative of such terms or comparable terminology.

Forward-looking statements contained in this press release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the Company’s ability to successfully integrate the Howden acquisition and other recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and regional conflicts and unrest, including the recent turmoil in the Middle East and the conflict between Russia and Ukraine including potential energy shortages in Europe and elsewhere; and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recent Annual Report on Form 10-K filed with the SEC, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.

USE OF NON-GAAP FINANCIAL INFORMATION

This press release contains non-GAAP financial information, including adjusted operating income, adjusted earnings per diluted share, net income attributable to Chart Industries, Inc. adjusted, free cash flow and EBITDA and adjusted EBITDA. The release also contains various pro forma measures (including pro forma orders, sales, gross profit, adjusted EBITDA, operating income and adjusted operating income), to reflect the following businesses that were divested in 2023: Roots, American Fan, Cofimco and Cryo Diffusion. For additional information regarding the Company's use of non-GAAP financial information, as well as reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), please see the reconciliation pages at the end of this news release.

The Company believes these non-GAAP measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. With respect to the Company’s 2024 and 2025 full year earnings outlook, the Company is not able to provide a reconciliation of the adjusted EBITDA, FCF or adjusted EPS because certain items may have not yet occurred or are out of the Company’s control and/or cannot be reasonably predicted.

CONFERENCE CALL
As previously announced, the Company has scheduled a conference call for Friday, November 1, 2024 at 8:30 a.m. ET to discuss its third quarter 2024 financial results. Participants wishing to join the live Q&A session must dial-in with the following information:

PARTICIPANT INFORMATION:
Toll-Free – North America: (+1) 800 549 8228
Toll North America and other locations: (+1) 289 819 1520
Conference ID: 35817

A live webcast and replay, as well as presentation slides, will be available on the Company’s investor relations website through the following link: Q3 2024 Webcast Registration. A telephone replay of the conference call can be accessed approximately two hours following the end of the call at 1-888-660-6264 with passcode 35817 through December 1, 2024.

About Chart Industries, Inc.

Chart Industries, Inc. is a leading independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling for the Nexus of Clean? - clean power, clean water, clean food, and clean industrials, regardless of molecule. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social and corporate governance (ESG) issues both for its company as well as its customers. With 64 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe and South America, the company maintains accountability and transparency to its team members, suppliers, customers and communities. To learn more, visit www.chartindustries.com

For more information, click here:

https://ir.chartindustries.com/

Chart Industries Investor Relations Contact:

John Walsh
SVP, Investor and Government Relations
1-770-721-8899
[email protected]

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⁽¹⁾ Includes an additional 4.43 and 5.39 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended September 30, 2024 and 2023, respectively. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles (“GAAP”). If the hedge could have been considered, it would have reduced the additional shares by 2.43 and 2.86 for the three months ended September 30, 2024 and 2023, respectively.
⁽²⁾ Includes an additional 4.66 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the nine months ended September 30, 2024. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. GAAP. If the hedge could have been considered, it would have reduced the additional shares by 2.54 for the nine months ended September 30, 2024.

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⁽¹⁾ Includes restricted cash and restricted cash equivalents of $2.3, $12.8, $3.2 and $1,941.7 as of September 30, 2024, September 30, 2023, June 30, 2024 and December 31, 2022, respectively.

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⁽¹⁾ Includes the mark-to-market of our inorganic investments in Avina, McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.
⁽²⁾ Other includes administrative costs related to certain equity investments, asset impairments and associated insurance recoveries, non-repeating legal costs and a one-time adjustment related to a 2022 settlement adjusted for in the second quarter of 2024.
⁽³⁾ Deal related and integration costs primarily includes costs associated with integrating Howden and impacts from the 2023 divestitures

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Adjusted earnings per common share attributable to Chart Industries, Inc. is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to earnings per share in accordance with U.S. GAAP. Management believes that adjusted earnings per common share attributable to Chart Industries, Inc. facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. Prior to the second quarter of 2024, the impacts of the mandatory convertible preferred stock dividend were excluded from adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP). The impacts are now included in adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) and historical periods have been restated to reflect the change in treatment.

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Free cash flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. Management believes that free cash flow facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies.

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⁽¹⁾ Other includes administrative costs related to certain equity investments, asset impairments and associated insurance recoveries and non-repeating legal costs.
⁽²⁾ Deal related and integration costs primarily includes costs associated with integrating Howden and impacts from the 2023 divestitures

⁽¹⁾ Deal related and integration costs primarily includes costs associated with integrating Howden and impacts from the 2023 divestitures

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Adjusted operating income (loss) is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to operating income (loss) in accordance with U.S. GAAP. Management believes that adjusted operating income (loss) facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.

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Businesses divested in the fourth quarter of 2023 include American Fan, Cofimco and Cryo Diffusion. Pro forma orders, pro forma sales, pro forma gross profit and pro forma gross profit margin are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to orders, sales, gross profit and gross profit margin in accordance with U.S. GAAP. Management believes that pro forma orders, pro forma sales, pro forma gross profit and pro forma gross profit margin facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.

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⁽¹⁾ Includes the mark-to-market of our inorganic investments in Avina, McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.
⁽²⁾ Other includes administrative costs related to certain equity investments, asset impairments and associated insurance recoveries, non-repeating legal costs and a one-time adjustment related to a 2022 settlement adjusted for in the second quarter of 2024.
⁽³⁾ Deal related and integration costs primarily includes costs associated with integrating Howden and impacts from the 2023 divestitures.

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The reconciliation from net income from continuing operations to EBITDA (non-GAAP) includes acquisition related finance fees and loss on extinguishment of debt. EBITDA and adjusted EBITDA are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income from continuing operations in accordance with U.S. GAAP. Management believes that EBITDA and adjusted EBITDA facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.

⁽¹⁾ Includes the mark-to-market of our inorganic investments in Avina, McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.
⁽²⁾ Deal related and integration costs primarily includes costs associated with integrating Howden and impacts from the 2023 divestitures.

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Businesses divested in the fourth quarter of 2023 include American Fan, Cofimco and Cryo Diffusion. Pro forma orders, pro forma sales, pro forma gross profit, adjusted EBITDA, pro forma adjusted EBITDA, pro forma operating income and pro forma adjusted operating income are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to sales and net income from continuing operations in accordance with U.S. GAAP. Management believes that pro forma orders, pro forma sales, pro forma gross profit, adjusted EBITDA, pro forma adjusted EBITDA, pro forma operating income and pro forma adjusted operating income facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.

This press release was published by a CLEAR? Verified individual.